Chongqing Iron & Steel plans A share issuance to strategic investor

Chongqing Iron & Steel plans to issue up to 757,575,757 A shares to Hwabao Investment at RMB1.32 per share, aiming to raise no more than RMB1 billion. This issuance, approved by the board on December 19, 2025, constitutes a connected transaction as Hwabao Investment is a subsidiary of China Baowu, a substantial shareholder. The transaction requires shareholder and regulatory approvals, including a whitewash waiver from Hong Kong's Securities and Futures Commission.

Upon completion, the combined shareholding of China Baowu, Hwabao Investment, and parties acting in concert is expected to rise to approximately 35.07%, potentially triggering a mandatory general offer under Rule 26.1 of the Takeovers Code. Hwabao Investment has applied for a whitewash waiver to be exempt from this obligation, which requires approval from at least 75% of independent shareholders.

The proceeds will be used to replenish working capital and repay bank debts, aiming to optimize the company’s capital structure and enhance risk resilience. The issuance may dilute immediate returns for existing shareholders, and investors are advised to exercise caution due to market fluctuations and the uncertainty of regulatory approvals.